Shenzhen moves on from Hong Kong’s housing policy

Shenzhen, one of the most expensive cities in China, is ditching the Hong Kong model they had been following for more than two decades since private home ownership reforms were rolled out, and is ready to take a leaf from Singapore’s housing policy instead, as reported by Asiaone.

The Chinese city will offer 1 million government-subsidised homes at as low as half of the prevailing market rate, according to a consulting paper issued by the Housing and Construction Bureau of Shenzhen on 29 April 2019.

The subsidised homes will be equally split into three categories, including public rental flats leasing for 30 per cent of the market rent, affordable homes at half the market rate, and other homes at 60 per cent of the market rate.

These measures are part of a concerted effort by the Shenzhen authorities to provide 1.7 million homes by 2035, of which 60 per cent will be government subsidised, as pledged in June 2018.

The ambitious plan is dubbed as “the second housing reform” among market observers. The first reform was adopted in 1987 when the central government hosted the first land auction of China in Shenzhen—ushering in an era where the housing market was controlled by the market.

“Shenzhen would like to be a pioneer seeking a scheme more like Singapore, separating more affordable homes to average individuals seeking a place to live,” said Li Yujia, senior economist with the Real Estate Assessment And Development Research Centre, Shenzhen—a research arm of the Shenzhen government.

“Currently we are still using a Hong Kong model, where most homes are built and sold as commercial products in the private market and only a small portion of cheap rental flats are designed for the poorest.”

Shenzhen’s embrace of the Singapore model echoes President Xi Jinping’s pledge to build homes “for living in, not for speculation.”

Singapore has one of the world’s highest rates of home ownership at 90 per cent. Under the Singapore scheme, a family with a combined income of no more than SGD12,000 (HKD69,000) is eligible to apply for public housing.

Unlike Singapore, where financing is facilitated by affordable public housing prices and CPF savings, ownership of public flats in Hong Kong is not supported by government policy to the same degree. Unless Hong Kong’s society and politics were to mimic Singapore’s, it is questionable whether it can be grafted onto contemporary Hong Kong’s context. — Construction+ Online